EU approves tariffs up to 45% on Chinese EVs, despite internal disagreements among member states.
German automakers and Chinese manufacturers criticize the decision, warning of potential harm to trade relations.
China threatens retaliatory tariffs on European exports, including dairy, brandy, pork, and vehicles.
The European Union has approved definitive tariffs on Chinese-made electric vehicles (EVs) for the next five years. The decision, which comes despite internal disagreements among member states, aims to counter alleged unfair subsidies provided by China to its EV industry, according to a report from Automotive News.
The approved tariffs will be as high as 45%, adding to an existing 10% rate. The European Commission can implement these tariffs by October 31, but has committed to exploring negotiated alternatives with China.
Ten EU member states voted in favour of the tariff, while Germany and four others opposed, and 12 abstained. The European Commission supports the measure as a way to address China’s alleged unfair subsidization practices, which China denies.
BMW CEO Oliver Zipse called the decision a “fatal signal” for the European automotive industry. German automakers, including BMW, Volkswagen, and Mercedes-Benz, along with Chinese manufacturers like Geely and MG Motor France, have criticized the tariffs for potentially harming EU-China trade relations.
Volkswagen emphasized the need for constructive dialogue, while Mercedes-Benz warned of “far-reaching negative consequences” from the tariffs. Several stakeholders noted that the tariff’s potential to raise consumer prices poses risks to the European automotive industry.
The EU remains divided on the issue, with some countries advocating for minimum pricing as an alternative to tariffs. European parts suppliers, represented by Clepa, view tariffs as a temporary measure and advocate for comprehensive structural solutions.
France’s automotive sector, represented by PFA, supports the tariffs for ensuring fair trade, contrasting with Germany’s automotive lobby’s concerns over retaliatory actions.
In response to the EU’s decision, China has threatened to levy tariffs on European exports, including dairy, brandy, pork, and vehicles.
The European Commission is required to formalize the regulation by October 30. Negotiations with China continue as the EU aims to secure a World Trade Organization-compatible solution to the issue.
Finance ministers from Germany, Spain, and Sweden have expressed support for continued negotiations, particularly for tailored solutions for automakers like Volvo.
The tariff decision comes as part of broader EU efforts to reform global trade relations and reduce dependency on China. The European Commission perceives Chinese state-backed competition as potentially coercive.
Canada’s 106% Tariff on China-Made EVs Could Kill Some Models Like the Polestar 2
Meanwhile, in Canada…
While the EU grapples with its decision on Chinese EV tariffs, Canada has taken a more decisive stance. As of October 1, 2024, Canada imposed a 100% tariff on Chinese-made electric vehicles and some hybrids. This move, aimed at protecting and growing Canada’s domestic EV industry, has sparked debate among consumers and industry experts.
Critics argue that the tariff could hinder EV adoption and affordability, while supporters see it as a necessary step to safeguard Canadian manufacturing.
The Canadian government is also considering additional measures, including potential surtaxes on Chinese batteries and critical minerals, as part of a broader strategy to address concerns about unfair competition and environmental standards.
